How South Carolina taxes retirement income

Some 2026 figures pending confirmation Tax year 2026 · research last updated October 2, 2026

South Carolina doesn't tax Social Security benefits.
Exclusions and subtractions for retirement income (details below):
- General retirement income deduction: at most $10,000 per person.
- Age 65 and older deduction against any income: from age 65, at most $15,000 per person.
- Military retirement deduction (12-6-1171) — noted only.
Rates for 2026: 1.99% to 5.21%, graduated.

At a glance

Income tax	Yes
Rates (2026)	1.99% to 5.21%, graduated
Starts from	Federal adjusted gross income (AGI)
Standard deduction	$15,000 single, $30,000 married filing jointly
Social Security	Not taxed
Retirement income exclusions	3 (see below)
Roth conversions	Taxable
Capital gains	Special treatment (see below)
Local income tax	None

Tax rates

Brackets apply to South Carolina taxable income. Other filing statuses are in the rules reference.

Rate	Single: taxable income	Married filing jointly: taxable income
1.99%	$0 to $30,000	$0 to $30,000
5.21%	$30,000 and up	$30,000 and up

South Carolina doesn't tax Social Security benefits.

Pensions, IRAs and 401(k)s

General retirement income deduction (S.C. Code 12-6-1170(A))

Limit: $10,000 per person · Applies to: pensions, IRA distributions, 401(k) distributions, 403b, 457, government pensions, military retired pay

Original owner of a qualified retirement account may deduct up to $3,000/yr of retirement income through age 64 and up to $10,000/yr beginning in the year the taxpayer reaches 65 (age at Dec 31). Retirement income = otherwise-taxable income from IRC 401, 403, 408 (IRA), 457 plans and all federal/state/local public employee plans incl. military. Per person (each spouse on a joint return traced separately). Not available for inherited accounts except a surviving spouse, who applies the deceased spouse's deduction in addition to their own. Social Security does not count (it is not otherwise taxable in SC).

Age 65 and older deduction against any income (S.C. Code 12-6-1170(B))

Age: 65+ · Limit: $15,000 per person · Applies to: any income

Resident 65+ by end of tax year may deduct up to $15,000 of any SC taxable income, REDUCED by the amount taken as the general retirement income deduction above (and by any military deduction under 12-6-1171). Joint return: $15,000 if one spouse is 65+, $30,000 if both; income is not traced by spouse on a joint return. Net effect for a 65+ person with >= $10,000 of qualified retirement income: $10,000 retirement + $5,000 age = $15,000 total per person. Surviving-spouse retirement amounts do not reduce it.

Military retirement deduction (12-6-1171) — noted only

Applies to: military retired pay

From TY2022 (Act 228 of 2022; Rev. Rul. 22-11): all military retirement income included in SC taxable income is deductible, any age, no cap. Amounts claimed here reduce the general retirement and 65+ deductions above for that individual.

Roth conversions

A Roth conversion counts as taxable income for South Carolina. Whether a retirement income exclusion can cover part of it depends on the rules above.

Capital gains

44% of net long-term capital gain (assets held > 1 year) is deducted (S.C. Code 12-6-1150); remainder taxed at ordinary rates.

More detail from our research notes

Act 110 of 2026 (H.4216, signed 2026-03-30) applies to tax years beginning after 2025: starting point is federal AGI; federal standard/itemized deductions are no longer used (12-6-50(21)); they are replaced by the SC Income Adjusted Deduction (SCIAD, 12-6-1140(15)). SCIAD = $15,000 single/MFS, $22,500 HOH, $30,000 MFJ/surviving spouse, reduced by the fraction (federal AGI - threshold)/denominator: single/MFS threshold $40,000, denominator $55,000 (zero at $95,000); HOH $60,000 / $82,500 (zero at $142,500); MFJ $80,000 / $110,000 (zero at $190,000). Federal AGI includes taxable Social Security, so SS raises the SCIAD phase-out even though SS itself is subtracted. Tax: 1.99% of SC taxable income under $30,000; at $30,000+ tax = 5.21% x income - $966 (equivalent to 1.99% on first $30,000 + 5.21% above). Same schedule for all filing statuses. Top rate may be cut further in future years by BEA revenue trigger (determination by Feb 15 each year). Brackets are indexed each year under 12-6-520 (chained CPI, max 4%/yr, $10 rounding; IL #26-20), but the 2026 tables still use $30,000, so indexing starts with TY2027; SCIAD itself has no indexing provision. The SCIAD reduction is rounded down to the next lowest $10 (12-6-1140(15)(c)). Social Security excluded because SC gross income is computed without IRC 86 (12-6-1120). Order for Taxtirement: federal AGI -> SC subtractions (SS, 44% LTCG, retirement and 65+ deductions, dependent exemption) -> minus SCIAD -> tax. SC does not impose the 10% early-distribution penalty. EITC capped at $200 (not retiree-relevant).

Pending confirmation

These points were still being confirmed against South Carolina's published 2026 forms when this page was built. Most are waiting on forms the state publishes around the turn of the year.

3 items

2026 SC1040 instructions not yet published (the 2026 SC1040 form Rev. 6/22/26 and SC1040TT Rev. 6/17/26 are posted as software-developer drafts); expected late 2026 (the 2025 edition is dated August 2025; the developer copy https://dor.sc.gov/sites/dor/files/SoftwareDeveloperForms/SC1040Inst.pdf was still the 2025 edition on 2026-10-02). Line order, rate schedule and SCIAD are confirmed (see sources); worksheets for the retirement/65+ deductions still come from 2025.
Whether Roth conversion income qualifies as 'retirement income' for the $3,000/$10,000 deduction (it is otherwise-taxable income from a 408 plan and not penalized in SC, so likely yes) — no DOR statement found.
Dependent exemption (12-6-1160) amount for 2026 not researched (retired household rarely has dependents).

Sources

Every figure comes from these documents, mostly the state's own forms, instructions and statutes.

2026 rates (1.99% / 5.21% minus $966), AGI starting point, SCIAD amounts, effective 2026https://dor.sc.gov/news/information-about-h-4216
SC Information Letter #26-20 (Aug 31, 2026): 2026 tax computation ($30,000 / 5.21% - $966); brackets indexed each year by chained CPI under 12-6-520 (so from 2027); SCIAD table incl. MFS = single figures, phase-out on federal AGI, reduction rounded down to…https://dor.sc.gov/sites/dor/files/policies/IL26-20.pdf
2026 SC1040 (Rev. 6/22/26): line 1 federal AGI, line 4 SCIAD, line 5 Schedule ADJ subtractions, line 7 = line 3 - (4+5), floored at 0https://dor.sc.gov/sites/dor/files/SoftwareDeveloperForms/SC1040.pdf
2026 SC1040TT tax tables and rate schedule (Rev. 6/17/26): 5.21% minus $966 at $100,000+, $30,000 edge not indexed for 2026https://dor.sc.gov/sites/dor/files/SoftwareDeveloperForms/SC1040TT.pdf
SC Revenue Ruling #22-11: military retirement fully deductible under 12-6-1171 (2022 Act 228), replacing the $17,500/$30,000 capshttps://dor.sc.gov/sites/dor/files/policies/RR22-11.pdf
Act 110 (H.4216) bill text: 12-6-510 rates, 12-6-1140(15) SCIAD and phase-out thresholds/denominators, 12-6-50(21)https://www.scstatehouse.gov/sess126_2025-2026/bills/4216.htm
SC Revenue Ruling 21-13: 12-6-1170 retirement ($3,000/$10,000) and age-65 ($15,000/$30,000) deductions, definitions, offsets, SS not eligiblehttps://dor.sc.gov/income-tax-age-65-and-older-deduction-general-and-military-retirement-deductions-and-earned-income-offset
S.C. Code Title 12 Ch. 6: 12-6-1150 44% capital gain deduction; 12-6-1120 SS exclusion (no IRC 86); 12-6-520 indexinghttps://www.scstatehouse.gov/code/t12c006.php
2025 state tax addback (SC1040 line a worksheet: lesser of itemized - federal standard deduction ($0 MFS), Sch A 5a, and the federal limit less property taxes); none from 2026 (Act 110) (2025 SC1040 instructions pp. 3-4)https://dor.sc.gov/sites/dor/files/forms/SC1040Instr_2025.pdf

Taxtirement's South Carolina calculation is also checked against a second, independent implementation on 1,000 random households. How we check our numbers.

See your own years. Taxtirement applies these South Carolina rules, and the federal and Medicare rules, to your household for every year of retirement, and shows the calculation behind each number. Coming November 2026 for iPhone, iPad and Mac.

This page summarizes South Carolina's 2026 rules as Taxtirement applies them, for education and planning. It isn't tax advice, and it doesn't cover every situation (for example part-year residents, businesses or military-only provisions). Rules change; check the state's current instructions, or a tax professional, before you act. Spotted something wrong? Tell us.